Home | Business News | Browse by Publication | M | Metal Center News

How long before Canada's economy joins the U.S.? So far, the Canadian economy seems relatively unfazed by the credit crisis in the U.S. But is it only a matter of time before Canada gets drawn into the economic woes of its biggest trading partner?

Article Excerpt
[ILLUSTRATION OMITTED]

DESPITE THE ECONOMIC TURBULENCE buffeting their neighbor to the south, Canadians involved in metals distribution, manufacturing and the substantial export trade with the United States are still hopeful their country will weather the global financial crisis without a significant downturn.

But some factors, including recessionary trends already affecting Canada, may make that challenge more difficult to achieve, say experts studying the country's economy.

"We're looking at a different environment domestically now," says Aron Gampel, vice president and deputy chief economist with Scotiabank in Toronto, who along with other Canadian economy watchers notes that the country is dependent on raw material prices. "We are price takers, and we depend upon the powerful manufacturing machines around the world to sustain the big investments that we have. But this country is much better off than many around the world," he says.

Gampel describes the effect on Canada from the credit crisis and global stock market turmoil as "very complicated," but adds, "the bottom line is that this is an economy that has a much different set of circumstances [than the U.S.]. We have an economy where the federal government has been consistently in surplus and has been paying down debt, so it has a very favorable balance sheet. We have a banking system that is one of the best and most capitalized in the world."

The Bank of Canada has stepped in with other countries' central banks to guarantee liquidity and back interbank loans, but the Canadian government has not intervened by taking equity positions in private banks as governments have done recently in the United States and Europe.

Pedro Antunes, director of national forecasting for the Conference Board of Canada in Ottawa, notes that 11...